Finance
The Past Year
,Fot.Low DT. the usual custom I am devoting the financial article in the current number of The Spectator to comments upon some of the outstanding events of the past year, and next .week I shall hope to deal with the City's views concerning commercial and financial prospects for 1986. . I imagine that opinions concerning- the events of the :past year Must Vary considerably according to the manner in which they have affected different individuals. To the politicians and statesmen the yaar 1965 must have been an exceedingly harassing one. To the wi.ge-caraers throughout the country the year has not been without its favourable ,points, both as regards higher wages in certain industries and a diminution of the numbers of unern7 ployed. To many concerned in wholesale trades and in manufactures the year has brought increased activity, and in many directions increased profits. To banks and insurance offices the year has also been not altogether an unfavourable one in .spite of the. extreme ease in money and, while owing to. foreign politics, the year on the Stock Exchange has witnessed many variations in prices, it has nevertheless been a good year for most stock- brokers, both as regards profits from commissions on transactions for the public, and as regards profits achieved. in connexion with public and private loan placings. To the small investor the year has brought little in the way of relief of taxation, and to many rentiers, and especially those who were holders of the old Five per cent. War Loan, it has brought diminished income, with some rise in the cost of living which has imparted a rather sombre tone to the year from the point of view of the small investor. • CONDITIONS HERE AND ELSEWHERE.
Those who are of a philosophical turn of mind can doubtless gather considerable satisfaction by comparing conditions in this country with those obtaining in many other parts of the world, and especially in some of the countries of Europe. It would probably be true to say that the general standard of living is as high, if not higher, in this than in any other country, and while at the present moment America is experiencing some revival in industrial activity and prosperity, the fact remains that the proportion of unemployed to.the entire population of America is much greater than it is here. Throughout the year the soundness of the national finances and of our banking system has imparted a general feeling of confidence making for goodwill, and comfort, while the year has also been free from Labour disturb- ances, or indeed from anything affecting general social goodwill. In France both political and currency condi- tions have been disturbed throughout the year, whereas no such conditions have prevailed here, while a comparison of conditions in Italy and in Germany—so far as they are known—with those obtaining here must have frequently occasioned. a feeling of gratitude that our lot has been cast in Great Britain.
HOW SECURITIES HAVE MOVED.
Not of course that we have been without our troubles, and in the spring particularly, credit troubles in the commodity market, and in connexion with what came to be known as the "Pepper Crisis" occasioned some- what severe losses and securities were adversely affected. Indeed, while in no way retracting what has been said with regard to activity' in the stock-markets and profits accruing to stockbrokers, the fact remains that whereas for some three years past there has been a great rise in public securities running each year into hundreds of millions of pounds, the past year reveals just a slight decrease, a decrease however entirely accounted for by a setback in Government securities and Other high-class investment stocks, for shares of the more speculative description have risen appreciably. This setback in gilt-edged securities is deserving of passing mention because it has occurred in spite of the fact that the ease in money has been as pronounced during (Continued on page 1084.)
Finance
(Con,tinued from page 1082.) the year as it was in 1984. No doubt the setback has been due to some extent to an increase in the number and extent of new capital issues of the Trustee type, while there is also little doubt that the high price of gilt-edged stocks has driven the investor perforce into the more speculative descriptions, equally there is little doubt that the Fixed Trugts movement has put very large sums of money into industrial shares rather than into gilt-edged securities. Nevertheless, it is rather striking that in spite of the oft-proclaimed surplus of money awaiting investment, securities on balance should be a little lower than a year ago.
INTERNATIONAL CONDITIONS.
Still, so far as domestic conditions are concerned the past year on the whole must, I think, be viewed favour- ably, especially when it is remembered that improved industrial conditions have been achieved in the face of influences which might easily have exercised a less desirable effect. For throughout the year satisfaction with regard to domestic conditions has been marred by a skeleton in the cupboard; that skeleton takes the form of international conditions. Extreme economic interna- tionalism in almost every country has prevented that measure of international co-operation which is required to bring about world-wide goodwill and world-wide prosperity. Moreover, we know that in some of the countries of Europe there has been something worse than a lack of co-operation. A sense of insecurity as regards the preservation of international peace has haunted Europe for some years past, and during the past few years the growth of the spirit of militarism in Germany under the present Dictator, with not very dissimilar conditions in Italy, has caused grave disquietude.
TRIALS OF THE LEAGUE.
Not only so, but during the year which has just closed this disquietude has been found to be justified by the outbreak of war between Italy and Abyssinia. It must be common ground that Signor Mussolini's action con- stituted one of the most flagrant breaches of the League of Nations' Covenant that could possibly be imagined, and therefore the event imposed a severe test upon the ability of the League of Nations to prevent the outbreak of war. The fact that throughout the discussions pre- ceding the commencement of hostilities between Italy and Abyssinia the former country completely disregarded all arguments and protests on the part of the League of Nations, of which it was itself a part, effectually demon- strated the inability of the League to prevent the out- break of war, and while the unity achieved by fifty nations in the imposition of financial and economic sanctions is impressive, there have been unwelcome demonstrations of the difficulties that attend the attempt to impose such sanctions as are calculated to bring the war to a speedy close.
A SERIOUS OUTLOOK.
In the opinion of the City the latest developments of this European crisis have revealed certain outstanding facts of a character calculated materially to affect de- velopments in the near future. Quite briefly stated, it has been shown on the one hand that there is the strongest possible desire in this country to support the principles for which the League of Nations stands. But at the same time, in the City's view, it has also revealed points in the constitution of the League calculated to impair its effectiveness, while it has also revealed the necessity for this country to repair any weakness in its defences, at the Same time striving even more earnestly to promote the cause of peace and the principles for which the League of Nations stands.
It would, however, be unwise to conclude, any summary of the year's events and developments without fully recognising the unsatisfactory .state of international affairs and also their inevitable ultimate influence upon
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